This copy is for your personal non-commercial use only. To order presentation-ready copies of Toronto Star content for distribution to colleagues, clients or customers, or inquire about permissions/licensing, please go to: www.TorontoStarReprints.com

Cannabis retail shops are scrambling to open on time across Ontario

KITCHENER — Would-be cannabis shop owners in Ontario have just a few weeks left to pass through intense regulatory hoops if they hope to be selling marijuana by April.

Most likely some of them will be unable to open in time to meet the government deadline, industry insiders say. With just a month and a half to go, only eight proposed shops across the province have submitted their retail store applications.

Ontario wants the first wave of cannabis retail stores to open by April 1, if retail licence holders fail to meet this deadline they will be met with stiff financial penalties. (Mark Thiessen / The Associated Press)

What many had thought would be a chance to make a quick buck reselling one of Ontario’s first 25 pot shop licenses is turning out to be a nightmare of red tape and regulation.

“That was a perception that was widely spread in the beginning, that this was a golden ticket,” said Brenna Boonstra, who oversees the retail licensing group for Cannabis Compliance Inc., an industry consulting firm.

“It’s proving to be tremendously complicated.”

Article Continued Below

Just two of the seven lottery winners for the West Region — a vast chunk of the province that stretches from Waterloo Region to Hamilton to Windsor — have filed their retail store application.

One is for a proposed shop in St. Catharines, the other is in London. It won’t be known where the other lottery winners intend to open a store until they enter into a public notice period.

The Alcohol and Gaming Commission of Ontario, the province’s pot regulator, says it will begin doling out licences as soon as March 4. All proposed stores also need to be approved by the province’s government-run supplier, the Ontario Cannabis Store.

Article Continued Below

Already, one Ontario cannabis lottery winner has been disqualified for breaking a rule that prohibits any changes to the name of the person on an application or the corporate structure of the company operating the store.

With all the deals being made behind the scenes, Boonstra expects more disqualifications to follow. The AGCO’s rules prohibit any sort of franchise agreement that would see someone else run the cannabis shop, or enter into a partnership that would see them share or hand over control to another entity.

She believes some lottery winners, with little to no experience or even interest in running a cannabis shop, signed deals that may have breached those rules. They only had a week to consider multi-million-dollar offers for their potential licence.

“Every lottery winner was inundated with offers,” she said. “A lot of them saw this as an opportunity to cash in ... It’s very tempting to accept an offer.”

Many lottery winners soon realized their plans to flip their licence to someone else was far more complicated than they imagined. Now they’re faced with the challenge of opening and running a store where everything from the training of staff to the way inventory is delivered is heavily regulated by the province.

And if they fail to open by April 1, they could face stiff financial penalties.

“It’s daunting to open a cannabis retail store and to operate in this industry,” Boonstra said. “For someone who may not even have a business background, and to execute a store opening by April 1, it’s an immense task.”

With little vetting required, more than 17,000 people paid a $75 fee to enter the cannabis store lottery. Ontario was the only province that choose to launch its retail cannabis stores this way.

Saskatchewan also held a lottery, but had a much higher standard for potential operators. Part of the reason Ontario’s would-be cannabis store owners are scrambling is because the province abandoned a plan for government-run pot shops just months before legalization arrived last October, to allow for private shops.

“Ontario came at this under a greater time crunch than other provinces,” Boonstra said.

“If you’re coming into this without any experience in cannabis retail, it will be challenging. The likelihood of a misstep is high.”

More from The Star & Partners

LOADING

Copyright owned or licensed by Toronto Star Newspapers Limited. All rights reserved. Republication or distribution of this content is expressly prohibited without the prior written consent of Toronto Star Newspapers Limited and/or its licensors. To order copies of Toronto Star articles, please go to: www.TorontoStarReprints.com